Correlation Between GM and Lkcm International
Can any of the company-specific risk be diversified away by investing in both GM and Lkcm International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and Lkcm International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Lkcm International Equity, you can compare the effects of market volatilities on GM and Lkcm International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GM with a short position of Lkcm International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lkcm International.
Diversification Opportunities for GM and Lkcm International
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Lkcm is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lkcm International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm International Equity and GM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Motors are associated (or correlated) with Lkcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm International Equity has no effect on the direction of GM i.e., GM and Lkcm International go up and down completely randomly.
Pair Corralation between GM and Lkcm International
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Lkcm International. In addition to that, GM is 2.84 times more volatile than Lkcm International Equity. It trades about -0.01 of its total potential returns per unit of risk. Lkcm International Equity is currently generating about 0.0 per unit of volatility. If you would invest 1,398 in Lkcm International Equity on November 28, 2024 and sell it today you would lose (4.00) from holding Lkcm International Equity or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Lkcm International Equity
Performance |
| Timeline |
| General Motors |
| Lkcm International Equity |
GM and Lkcm International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lkcm International
The main advantage of trading using opposite GM and Lkcm International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lkcm International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lkcm International will offset losses from the drop in Lkcm International's long position.The idea behind General Motors and Lkcm International Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lkcm International vs. Nasdaq 100 2x Strategy | Lkcm International vs. Glg Intl Small | Lkcm International vs. Guidemark E Fixed | Lkcm International vs. Arrow Managed Futures |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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